Pessimism about the future of the global economy is certainly nothing new, with executives perceiving geopolitical conflicts and inflation as the biggest risks to economic growth, closely followed by fluctuating energy prices and supply chain disruptions.
On an organizational level, executives are also taking steps to address technical innovation and energy considerations – such as net zero initiatives – which they perceive to be the greatest forces that will impact businesses over the next 20 years.
However, these external factors are only one part of the equation, and they are arguably factors that business leaders have less control over. The truth is that CEOs are losing sleep over the things that are taking place within an organization on a daily basis.
The results from a recent study conducted by Summit Leadership Partners in partnership with Wakefield Research revealed that there are a range of internal concerns that pose a threat to business growth if left unaddressed. However, with the right resources dedicated to people and culture, these threats can be overcome.
The study ‘Critical Success Factors to Scale’, surveyed 200 United States-based CEOs at ‘high-growth’ companies with an annual revenue of US$50 million to US$500 million, who have been in business for less than 25 years.
The respondents revealed that social and business skills were equally important to their role. Among the most essential qualities reported by CEOs were humility and openness to feedback (36 percent), encouraging diverse perspectives (34 percent) and driving accountability for results (35 percent).
In some instances, these CEOs were weighed down by certain internal grievances more than external forces, such as inflation and economic instability within the context of achieving growth.
Here are the biggest challenges for CEOs at the helm of growth-focused companies in 2023.
Securing and nurturing talent
With employees demanding a better work-life balance, flexible work arrangements and a greater sense of purpose in their roles, it’s hardly surprising that attracting top talent is a challenge for companies today. For 46 percent of high growth CEOs, the focus is on filling positions that are critical to the company’s growth as well as assessing the talent and skills of employees on a regular basis (52 percent).
“As companies prepare to scale, we’re seeing a major shift at high growth companies to place a greater emphasis on human capital. It’s becoming increasingly important for CEOs to prioritize organizational capabilities and structure more than ever,” said Dan Hawkins, Founder and CEO at Summit Leadership Partners.
Roles that were flagged as the most challenging to scale at the same rate of growth as the company were the Chief Financial Officer (61 percent), the Chief Operating Officer (48 percent) and the Chief Human Resources Officer (41 percent). This suggests a need for companies to have the right recruitment processes in place to ensure continued growth.
Delivering consistent results
Close to 60 percent of the respondents noted the pressure of delivering consistent results at a required pace as a top concern. This may be a reflection of the way teams resolve conflict, make decisions and interact in general. More than half of the CEOs surveyed agreed that an executive leadership team’s inability to resolve problems together is a barrier to growth.
Peggy Boyer, Managing Director of Talent Solutions, explained that the importance of good leadership can’t be underestimated.
“One of the most critical factors in facilitating growth is leadership behavior. Leaders must be very intentional about how they are shaping their company culture for future growth.”
The types of strategies the CEOs highlighted as relevant to scaling a business included performance feedback (41 percent), improving skill sets (40 percent), increasing talent in the leadership team and board (39 percent) and enhancing management systems and processes (39 percent).
In the study, 48 percent of CEOs highlighted a lack of alignment on strategic objectives within their organization. The fear of losing the core aspects that define a company’s culture was also noted as a factor that could further prevent growth (38 percent). When an organization’s culture and the organizational design are aligned with and support the strategic goals, it is easier to prepare for accelerated growth and stand out from the crowd.
Todd Fryling, Partner, Organization Solutions at Summit Leadership Partners, pointed out that trust in other employees was essential for continued growth.
“One of the most challenging and critical components to scaling a company is the management team’s ability to let go and empower their employees.”
Strategic alignment also plays a key role in delivering results when teams are made aware of how their work contributes to the wider goals of the organization. When the management team is able to translate strategy in practical terms, it empowers staff below the C-suite level to align with the organization’s objectives.
Leveraging a board’s capabilities
Being strategic about the role and value a board can bring to the company and its growth plans is important for high growth CEOs. The respondents in the survey recognized that boards can help in several ways: in identifying merger and acquisition opportunities, providing expertise for product, service or market expansion and outlining the requirements for executive-level roles.
“Boards, by definition, are supposed to have a ‘look but not touch’ approach and stay in a governance position, but boards have a unique vantage point and should feel comfortable having conversations with various levels of talent in the organization to understand what their specific needs are,” Hawkins suggested.